Rethink Medicaid decision

Published: Sunday, March 3, 2013 at 4:30 a.m.

Last Modified: Friday, March 1, 2013 at 4:16 p.m.

State leaders should reconsider their decision for North Carolina to opt out of expansion of Medicaid under Obamacare, considering the millions of dollars it will cost Pardee Hospital and other hospitals across the state.

Pardee expects to lose $54 million over 10 years due to federal cuts to Medicaid, which provides health care for low-income families and the disabled. But these would have been offset by expansions to the program under federal health care reform, hospital CEO Jay Kirby said. The General Assembly last week passed legislation prohibiting the state from participating in the expansion of Medicaid to cover more low-income residents.

“We expected the federal government to cut that $54 million over 10 years, but we also expected the state — as most states — would sign on to Medicaid and up what’s being covered for uninsured and balance that out,” Kirby told the Henderson County Republican Men’s Club.

A few weeks ago, we said the state should not rush to foreclose options on Medicaid expansion because of its ramifications for North Carolina’s taxpayers, economy and the poor. Add to the list of those potentially harmed Pardee and other hospitals struggling to stay in business in the rapidly changing health care landscape.

On Friday, due to another boneheaded political standoff in Washington, the federal government began making automatic spending cuts under the so-called “sequester.” If allowed to stand, the cuts will amount to $85 billion from a $3.6 trillion budget through September. Pardee expects to lose $90,000 per month if those cuts are not altered.

The decision to reject Medicaid expansion is potentially much more damaging to the hospital, Kirby says. If the hospital is unable to recoup the $54 million in Medicaid cuts over the next decade, it will have a hard time staying financially afloat.

Last year, the hospital’s bottom line was “$600,000 on net operating margin,” which amounts to .6 percent. Pardee stays afloat largely thanks to $2 million from the hospital’s foundation, good stewardship by its board of trustees and returns on investments, Kirby said.

“I think not expanding Medicaid just pours gas on the fire of Pardee Hospital,” he said.

Of the hospital’s $143 million in revenue last year, 70 percent came from Medicare and Medicaid, 23 percent from commercial insurance and 7 percent from uninsured patients.

About 500,000 low-income North Carolinians would qualify for health insurance under Medicaid expansion. Costs to provide health care for these residents are now shifted to hospital emergency rooms and patients with private insurance in the form of higher premiums.

“It’s a tax that business pays because Medicare and Medicaid aren’t doing it,” Kirby said.

The federal government has pledged to pay all costs for three years and 90 percent thereafter for states that expand Medicaid to cover people up to 138 percent of poverty level. In North Carolina, the expansion would cost the state an estimated $850 million the first six years, but would bring in $16 billion in federal dollars.

Objections to expanding Medicaid center on the idea that the federal government will not live up to its obligations, leaving the states to shoulder the burden. GOP leaders also say the state’s health department, which manages Medicaid, is broken, inefficient and badly mismanaged and is not ready to take on new recipients. The state should get to work on fixing those problems rather than using them as an excuse to leave a half-million residents without health care coverage.

In recent weeks, Republican governors who opposed Obamacare in Arizona, Ohio, Florida and New Jersey have changed course and decided to accept the federal dollars that come with Medicaid expansion. They realize that opting out will send federal tax dollars paid by their residents to generate jobs and provide health care in states that participate.

We are already paying to care for uninsured residents in the form of higher premiums, to the tune of about $1,000 annually for each North Carolina household with private insurance. Gov. Pat McCrory and GOP leaders should weigh the costs of refusing to participate — to the poor, the state’s economy and hospitals such as Pardee — and reconsider their decision.

<p>State leaders should reconsider their decision for North Carolina to opt out of expansion of Medicaid under Obamacare, considering the millions of dollars it will cost Pardee Hospital and other hospitals across the state.</p><p>Pardee expects to lose $54 million over 10 years due to federal cuts to Medicaid, which provides health care for low-income families and the disabled. But these would have been offset by expansions to the program under federal health care reform, hospital CEO Jay Kirby said. The General Assembly last week passed legislation prohibiting the state from participating in the expansion of Medicaid to cover more low-income residents.</p><p>We expected the federal government to cut that $54 million over 10 years, but we also expected the state  as most states  would sign on to Medicaid and up what’s being covered for uninsured and balance that out, Kirby told the Henderson County Republican Men’s Club.</p><p>A few weeks ago, we said the state should not rush to foreclose options on Medicaid expansion because of its ramifications for North Carolina’s taxpayers, economy and the poor. Add to the list of those potentially harmed Pardee and other hospitals struggling to stay in business in the rapidly changing health care landscape.</p><p>On Friday, due to another boneheaded political standoff in Washington, the federal government began making automatic spending cuts under the so-called sequester. If allowed to stand, the cuts will amount to $85 billion from a $3.6 trillion budget through September. Pardee expects to lose $90,000 per month if those cuts are not altered.</p><p>The decision to reject Medicaid expansion is potentially much more damaging to the hospital, Kirby says. If the hospital is unable to recoup the $54 million in Medicaid cuts over the next decade, it will have a hard time staying financially afloat.</p><p>Last year, the hospital’s bottom line was $600,000 on net operating margin, which amounts to .6 percent. Pardee stays afloat largely thanks to $2 million from the hospital’s foundation, good stewardship by its board of trustees and returns on investments, Kirby said.</p><p>I think not expanding Medicaid just pours gas on the fire of Pardee Hospital, he said.</p><p>Of the hospital’s $143 million in revenue last year, 70 percent came from Medicare and Medicaid, 23 percent from commercial insurance and 7 percent from uninsured patients.</p><p>About 500,000 low-income North Carolinians would qualify for health insurance under Medicaid expansion. Costs to provide health care for these residents are now shifted to hospital emergency rooms and patients with private insurance in the form of higher premiums.</p><p>It’s a tax that business pays because Medicare and Medicaid aren’t doing it, Kirby said.</p><p>The federal government has pledged to pay all costs for three years and 90 percent thereafter for states that expand Medicaid to cover people up to 138 percent of poverty level. In North Carolina, the expansion would cost the state an estimated $850 million the first six years, but would bring in $16 billion in federal dollars.</p><p>Objections to expanding Medicaid center on the idea that the federal government will not live up to its obligations, leaving the states to shoulder the burden. GOP leaders also say the state’s health department, which manages Medicaid, is broken, inefficient and badly mismanaged and is not ready to take on new recipients. The state should get to work on fixing those problems rather than using them as an excuse to leave a half-million residents without health care coverage.</p><p>In recent weeks, Republican governors who opposed Obamacare in Arizona, Ohio, Florida and New Jersey have changed course and decided to accept the federal dollars that come with Medicaid expansion. They realize that opting out will send federal tax dollars paid by their residents to generate jobs and provide health care in states that participate.</p><p>We are already paying to care for uninsured residents in the form of higher premiums, to the tune of about $1,000 annually for each North Carolina household with private insurance. Gov. Pat McCrory and GOP leaders should weigh the costs of refusing to participate  to the poor, the state’s economy and hospitals such as Pardee  and reconsider their decision.</p>